Only half of businesses decarbonising in line with 1.5C target, research warns
Major businesses have recorded a ‘noticeable drop’ in climate action following COP26, with new analysis warning that less than half of businesses are decarbonising in line with the 1.5C target of the Paris Agreement.
New analysis has been published today by EcoAct exploring the emissions data of international businesses across the FTSE, DOW, DAX, CAC, FTSE MIB and IBEX.
The Twelfth Annual Corporate Climate Reporting Performance Report warns that the swelling appetite for corporate net-zero and decarbonisation targets delivered in the build-up to COP26 last year is not being replicated in 2022.
EcoAct warns that 48% of FTSE 100 businesses achieved Scope 1 & 2 emissions reductions in line with 1.5°C, in comparison to 72% in 2021. FTSE100 businesses are also failing to set long-term targets to reduce emissions across the value chain. The analysis found that 97% of FTSE 100 firms for not have long-term targets for Scope 1 and 2 emissions and 96% do not for Scope 3.
Additionally, EcoAct is warning that commitments to net-zero have also started to slow. Despite a 21% year-on-year increase in businesses setting net-zero targets in 2021, notably in the build-up to COP26 in Glasgow, the increase has slowed to just 11% in 2022, with 75% of major businesses now covered by a net-zero target.
EcoAct’s chief executive Stuart Lemmon said: “It’s positive that three in four businesses intend to reach net-zero, and the FTSE 100’s leadership on Scope 3 emissions is notable. However, the climate reality of today means that this positive intent does not go nearly far enough, deep emissions cuts are needed across all businesses in all industries. Many businesses have become well-versed in the requirements of climate disclosures but ultimately, the majority are still failing to act across Scopes 1, 2 and 3 in a way that will limit the temperature rise to 1.5°C.”
“Last year COP26 built phenomenal momentum, however, it appears that this progress has stalled. Far fewer businesses achieved emissions reductions this year, after we saw significant reductions as a result of COVID-19. Businesses have now a fresh set of economic and geopolitical challenges to contend with. These can however be a further stimulus for action. Accelerating decarbonisation across all sectors must become an imperative for businesses, not only to limit climate catastrophe but to mitigate widespread economic losses.”
With research from the Intergovernmental Panel on Climate Change (IPCC) warning that emissions need to peak by 2025 and be reduced by 43% by 2030, time is running out for corporates to set and deliver against decarbonisation targets in the long and short term.
In related news, AXA has issued the findings of its global survey of risk-related concerns, with climate change rising to the top for the first time.
AXA has today (24 October) released the ninth edition of its Future Risks Report. The global survey is based on responses from a panel of 4,500 risk experts from 58 countries and a representative sample of 20,000 people from 15 countries.
Climate change rose to the top of the lists of risks that experts and the public are most concerned about across the globe. It also became the main concern of the general public in the US for the first time., climbing above cyber security and the coronavirus pandemic.
Geopolitical tensions ranked second, even above cyber and Covid-19. In total, 95% of experts surveyed warned that geopolitical tensions are spreading across the globe and creating disruptive consequences. One such consequence is the energy price crisis, which ranked fourth on the list of risks, up from 17th place last year.
Additionally, the survey warns that confidence in policy makers and businesses to handle these risks are worsening. Trust in public authorities fell 4% year-on-year to 58% and by 2% for private companies to 45%.
“The 2022 edition of AXA’s Future Risk Report describes an overheated world, where crises are stacked on each other. It also confirms underlying trends such as the fear of climate change, a heightened sense of vulnerability among populations and the decline in trust in major institutions to find sustainable solutions,” AXA’s chief executive Thomas Buberl said.
“These trends point to an additional risk, the feeling of powerlessness, at a time when we need the mobilisation of all actors to provide collective, innovative and coordinated responses. The insurance sector in particular, can contribute its expertise in terms of prevention and protection. At AXA, we are determined to play our part to the full.”
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